Figuring out AWS pricing can seem just as complicated as configuring your network or designing your application. You may have heard horror stories of users who run their services and receive an unexpected bill for thousands of dollars at the end of the month. In reality, AWS pricing isn’t scary or difficult to understand – you simply pay for the services you actually use.

The tricky part is knowing which services use which pricing models, especially when you’re first starting out. In this guide, we’ll explain the different ways pricing is calculated so that you’ll never be surprised by your bill.

AWS Pricing in a Nutshell

AWS reduces your infrastructure costs by allowing you to pay only for what you use at the end of each month. This means you don’t have to sign a contract – you can stop using the services at any time without a penalty. Detailed pricing information for each service can be found on the AWS pricing page.

AWS offers two main pricing models, Compute Resources and Data Storage and Transfer. However, there are also other pricing models, such as request pricing, monthly targeted audience (MTA) pricing, events collected pricing, messages sent pricing, and more.

Below, we’ll explain the differences between the two major pricing models. So before you decide to use a service, be sure to check which one it uses.

Compute Resources

When you use compute resources, you pay on an hourly basis from the time you launch a resource until the time you terminate it. You can also get volume discounts up to 10% when you reserve more.

The following services fall under the compute resources pricing model:

Data Storage and Transfer

When you use data storage and transfer resources, you pay on a per-gigabyte basis. This pricing model is also known as tiered. This means that several different aspects of the service differ in cost. For instance, Amazon S3 has different prices for storage, requests, and data transfer. However, the more you use, the less you pay per gigabyte!

The following services fall under the data storage and transfer pricing model:

Free Tier

Did someone say free? Amazon offers a generous free tier if you’re unsure as to whether or not AWS is right for you. The AWS Free Tier includes services with a free tier available for 12 months after your AWS sign-up date, as well as additional service offers that do not expire at the end of your term. The free tier is a great way to try out new services, take advantage of some free hosting, and most importantly, get hands-on experience with the AWS cloud.

Common Questions About AWS Pricing

Are there ways I can save even more money?

For certain products, you can invest in reserved capacity and get a significantly discounted hourly rate. This results in overall savings of up to 60% (depending on the type of instance you reserve) over equivalent on-demand capacity.

Amazon is constantly improving their operational efficiencies, lowering power consumption, and generally lowering the cost of doing business. These optimizations and Amazon’s growing economies of scale result in lower pricing for users.

I plan on using multiple services. Can I consolidate my billing?

Yes! You can consolidate all of your accounts using consolidated billing and even get tiering benefits.

None of the pricing models fit my needs. Can I set up custom pricing?

Custom pricing is available for high volume projects with unique requirements. Your personal blog, for example, is probably not eligible for a custom pricing model. On the other hand, custom pricing could benefit you tremendously if your organization is starting to migrate a good portion of existing infrastructure to the cloud. For more information, contact AWS and speak with a sales representative.

Do I get any other services for no additional charge?

AWS also offers a variety of services for no additional charge:

  • AWS Elastic Beanstalk is an even easier way for you to quickly deploy and manage applications in the AWS cloud.
  • AWS CloudFormation gives developers and systems administrators an easy way to create a collection of related AWS resources and provision them in an orderly and predictable fashion.
  • AWS IAM controls your users’ access to AWS services and resources.
  • Auto Scaling automatically adds or removes Amazon Elastic Compute Cloud (EC2) instances according to conditions you define. With autoscaling, the number of Amazon EC2 instances you’re using increases seamlessly during demand spikes to maintain performance and decreases automatically during demand lulls to minimize costs.

Note that some of these services may incur costs indirectly. For example, an auto-scaling group does not cost anything by itself, but you are still responsible for the cost of the EC2 instances it creates.

That’s a wrap!

AWS pricing can be intimidating to beginners since not every service works the same way. However, a little research goes a long way. Once you get the hang of which services use which pricing models, you can start to optimize your infrastructure costs and get the most out of the Amazon Web Services platform.

What tips do you have to reduce the cost of AWS services? Share them in the comments!


Amazon offers more than 70 unique services, so we can’t blame you if you haven’t heard of them all! Discover 10 uncommon products and services available on the AWS platform here.

AWS services you may not know about

One response to “How Does AWS Pricing Work?”

  1. alin_grey says:

    Supper happy that AWS announced their new Per-Second Billing for EC2 Instances and EBS Volumes
    https://aws.amazon.com/blogs/aws/new-per-second-billing-for-ec2-instances-and-ebs-volumes/

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